Doing business in Ukraine

This site is your source of essential information about doing business with Ukraine. Learn about our economy and leading industries. Find Ukraine companies, products and services. Learn about investment opportunities and Ukraine’s co-hosting of EURO 2012.

Economy

Learn about Ukraine’s economy

Ukraine is an emerging free-market economy with considerable growth and investment potential. The country’s growing services and agriculture sectors complement the sizeable manufacturing and heavy industrial sectors. In the 2000 s the country posted solid GDP growth backed by favorable external conditions, strong domestic demand, macroeconomic stability, and solid consumer and investor confidence. Having been seriously affected by the 2008 economic crisis Ukraine was able to return on the path to recovery in 2010.

Chemical and ferrous metal industries have been the backbone of Ukrainian exports, with Ukraine ranking among the world’s top 10 steel producers. The production of manufactured goods includes metallurgical equipment, diesel locomotives, tractors, and automobiles. Ukraine has inherited a large high-tech base, including electronics, arms, and aerospace industries, although it requires considerable investment. With the introduction of new technologies and innovation in the agriculture Ukraine is poised to become a major producer of agricultural goods on the global scale. Ukraine is well-positioned to serve an Eastern European hub for software development and IT services.

Ukraine’s key trading partners include the EU countries and the Russian Federation.

Doing business in Ukraine

Ukraine can be a challenging market to do business. Ukraine’s ranking in the 2011 World Bank report on Doing Business has improved only slightly, but remained at the overall low level of 145. The government has recognized the need for improvement and is implementing an ambitious tax and public reform in order to make Ukraine a more straightforward place for businesses and tackle corruption.

Ukraine is famous for its highly skilled and relatively inexpensive labor force. The country has sophisticated telecommunication links with the world and adequate transportation and export infrastructure.

If you are interested in doing business with Ukraine, visit the website listed below for information about Ukrainian products, services and business opportunities:

Country profile

Ukraine is situated in Eastern Europe, bordering the Black Sea, between Poland, Romania, Hungary, Slovak Republic and Moldova in the west, Belarus in the north and Russia in the east. With the total area of 603,550 sq km. it is the second-largest country in Europe.

Most of Ukraine’s territory consists of fertile plains (steppes) and plateaus, mountains are found only in the west (the Carpathians), and in the Crimean Peninsula in the extreme south. Lakes, rivers and other bodies of water cover 3.9 % of its territory. The climate is temperate continental.

Population

Ukraine has a population of 45.4 million people, with about 70 % concentrated in urban centers in the more densely populated industrial regions in the east and southeast. Ukrainians make up the majority of population, with other significant ethnic groups being Russians, Belarusians, Moldovans, Crimean Tatars, Bulgarians, Hungarians, Romanians, Poles, Jews, Armenians and Greeks.

Political system and government

Ukraine is a republic under a presidential system with separate legislative, executive, and judicial branches. The President is elected by popular vote for a five-year term and is the formal head of state. Following the recent constitutional reform the President nominates the Prime Minister for parliamentary approval and the Prime Minister nominates the Cabinet of Ministers.

The judicial system in Ukraine is based on based on the civil law model. The judiciary is independent from the executive.

Role of government in business

The Ukrainian government is responsible for legislation relevant to business operations. This includes legislation and regulations in areas such as taxation, trade relations and foreign investment, banking and finance, land transfer, building and construction, competition laws, protection of intellectual property, industrial relations, migration, etc. The government seeks to streamline the public administration system to eliminate excessive regulation and make regulatory environment friendlier to business.

For more information about Ukraine’s business climate and doing business in Ukraine, visit the websites listed below.

Banking and finance

The National Bank of Ukraine is responsible for the implementation of the monetary policy, exchange rate management and supervision of Ukraine’s banking system. Also it is in charge of the registration and licensing of the banks.

The Ukrainian banking system is quite diverse and undergoing consolidation. There are a number of large commercial banks covering the whole country, as well as a large number of smaller banks and other financial institutions. Many of the global banks are represented in Ukraine.

Currency

Since 1996 the currency used in Ukraine has been the Hryvnia.

For more information about Ukraine’s monetary, fiscal and exchange rate policy, as well as foreign exchange rates, see the National Bank of Ukraine website.

Exports and imports

Ukraine has a mixed economy with sizeable heavy industry, manufacturing and service sectors complemented by agricultural sector. The economy is strongly trade-oriented.

Exports

The value of Ukraine’s merchandise exports for the Q1-Q3 2010 was USD 41.00 billion, representing a 30 % percent increase over the previous year. Ukrainian merchandise exports are geographically diverse, with the top 20 markets accounting for 35 percent of the total export revenues in 2010.

Imports

The value of Ukraine’s merchandise imports for the Q1-Q3 2010 was USD 47.86 billion, representing a 33.5 % percent increase over the previous year. Russia is the largest source of merchandise imports for Ukraine, with the lion share of imports being oil and natural gas. Top 20 import sources accounted for 85 % of the total value of merchandise imports in 2010, with 37 % coming from Russia.

Transport and freight

Transport is a major part of economic activity in Ukraine. The country has a comprehensive transport system and developed infrastructure of rail and water transport. With its advantageous geographical location, Ukraine lies at intersection of major trading routes between Europe, Russia and Asia, including Pan-European transport corridors, Rail Cooperation Corridors (ORC) and European Transport Corridor—Caucasus—Asia.

The country has inherited a comprehensive network of roads (around 170,000 kms) and railways (22,000 kms) linked to 10 major sea ports and 5 major airports. There is considerable room for improvement in the quality of the transport infrastructure and the government plans massive investment in the transportation sector.

Rail

Just under 55 percent of Ukraine’s exports and 42 percent of imports by volume are transported by rail. The track is owned and operated by the state railway company Ukrzaliznytsia. The length of the railway network is 22,000 kms, which is the third largest system in Europe. The railway connects all major metropolitan areas and industrial centers with sea ports and all neighboring countries. The Ukrainian railway system is currently undergoing large-scale reconstruction to increase the speed and automation.

Ports

The government is gradually deregulating port operations and nearly all major sea ports are investing or planning infrastructure upgrades.

Aviation

Ukraine is well served by domestic and international airlines, including Aerosvit and UIA, linking the country with the rest of the world with freight and passenger services.

The air services sector is going through rapid development to accommodate the growing number of domestic and foreign travelers who enjoy the visa-free regime. As part of the preparation for hosting EURO 2012 the government is making massive investments in the airport infrastructure. Currently, three major air terminals in Kyiv, Lviv and Donetsk are undergoing reconstruction. New terminals have already been added in the Kharkiv and Boryspil airports.

Freight forwarders

Ukraine’s exporters and importers are well served by freight forwarding companies, both national and international. For more information refer to the following:

Invest in Ukraine

Despite the challenges Ukraine will remain an attractive destination for investment. The country is a large consumer market with considerable growth potential and relatively low competition in many sectors. It has highly educated and skilled labor force. Ukraine’s location between the European, Russian and Asia markets, extensive railroad system and Black Sea ports make it a competitive platform for manufacturing and exporting to the neighboring countries and beyond.

International investors will appreciate the investment opportunities in agriculture, energy efficiency, IT and software development and infrastructure. With the development of the public-private partnership model international investors will be able to take advantage of investing in large infrastructure projects.

Agriculture

Boasting of over 30 % of the world’s most fertile black soils, favorable climate conditions and proximity to markets Ukraine is a perfect location for industrial or organic agriculture. Ukraine is already one of the top players in the global markets for grain and sunflower oil and a major supplier of high-protein based foods. With improvements in market regulations, increasing availability of agricultural infrastructure and introduction of new technologies there is considerable room for efficiency gains and profitability growth.

Experts estimate the need for investment in the agribusiness sector in the range of 25 billion USD. The recent IPOs of Ukrainian agribusiness companies on the LSE, LSE AIM and WSE point to investors appreciation of the sector’s potential.

Energy and energy efficiency

Ukraine’s economy is around three times as energy intensive as that in the EU. This means that on average, Ukrainian companies use more energy to produce the same output as EU companies. The potential for energy efficiency in Ukrainian companies is huge, even with today’s Ukrainian energy prices, which are low compared to EU levels. While the market for energy efficiency investments in Ukraine is still in its early stage of development, the drive to lower energy consumption will open new opportunities for providers of energy efficiency technology and solutions.

Ukraine has provided incentives to green energy projects, including production of bio-fuels and wind energy. The ‘green electricity’ tariffs are among most favorable in Europe and electricity distribution companies are required to connect generators of green electricity to the grid at the distributors’ cost.

If you are interested to learn about energy efficiency and investment projects, visit the web sites listed below:

IT and software development

Ukraine’s IT and software industry includes areas as diverse as outsources software development, software maintenance, digital content, enterprise solutions, payments, geospatial and communications technology. Ukraine is building its reputation as the leading provider of outsourced IT and software development services in the Central and Eastern Europe. This is the result of growing global demand for outsourced services, availability of qualified local IT professionals, and interest from domestic and international investors.

If you are interested to learn more about the IT and software development industry in Ukraine, visit the web sites listed below:

Infrastructure

Ukraine needs to modernize its infrastructure across all sectors of the economy. The sectors where investment is critical include energy (gas supply and distribution), transportation (airports, railways and stations, highway network, sea ports), agriculture, and public utilities (water, waste management, heating). The development of the framework for public-private partnerships will enable foreign investors to participate in large-scale infrastructure investment projects.

If you are interested in information about Ukrainian products, services and investment opportunities, visit the web sites listed below:

Investment climate overview

Ukraine encourages foreign investment and investors are able to purchase businesses and property (but not agricultural land), repatriate revenue and profits, and receive compensation if property is nationalized. In the most recent move to improve business climate, Ukraine has eased business start-up by reducing the minimum capital requirement, streamlined construction permitting, and simplified tax compliance by introducing and continually enhancing an electronic filing system for value added tax.

Ukraine has signed a number of bilateral agreements which may extend additional protection, guarantees or incentives to foreign investors.

In 2005 the government has set up InvestUkraine, Center for Foreign Investment Promotion, to facilitate entry of foreign investors into Ukraine by providing advice on regulations and investment opportunities, linking investors with potential business partners and government, and assisting with settlement of disputes.

EURO 2012

EURO 2012 is one of the most challenging and complicated projects that Ukraine has undertaken since independence. Co-hosted by Ukraine and Poland EURO 2012 is not only one of the largest sporting events in Europe, but it is also an opportunity that will provide Ukraine with tangible benefits for many years to come.

EURO 2012 has become an important impetus for large-scale investment and infrastructure development in a number of sectors, particularly in air and railway transportation, highway infrastructure, hotels and hospitality industry.

To learn more about EURO 2012 and business opportunities visit the web sites listed below:

Find Ukrainian business partners

To locate Ukrainian companies, products or services across multiple industries, please refer to the below trade directories and chambers of commerce. These are just some of the ways to find Ukrainian companies.